New GAO Report Highlights Negative Impact of Reduced Reimbursement on Oxygen Access

As the GAO report highlights a drastic drop in oxygen suppliers, CQRC urges an extension of blended rate to ensure continued access to home respiratory therapy supplies and equipment.

Washington, DC, August 27, 2018 --( The Council for Quality Respiratory Care (CQRC) - a coalition of the nation's leading home oxygen therapy provider and manufacturing companies – today commended the Government Accountability Office (GAO) for releasing a new report on the negative impact that reduced reimbursement rates have on Medicare beneficiaries’ access to durable medical equipment (DME), including home respiratory therapy and equipment.

The GAO report examines the effects of the Centers for Medicare & Medicaid Services (CMS) 2016 decision to adjust Medicare fee-for-service payment rates for certain categories of DME in areas not subject to the competitive bidding program (CBP). As reimbursement rates for home oxygen supplies and equipment fell below the cost of providing these essential services in these so-called non-bid areas, a significant number of oxygen providers had no choice but to exit the market.

“This report validates what oxygen providers have been warning for years: that insufficient reimbursement rates make it harder to stay in business and serve Medicare patients who require supplemental oxygen and respiratory care to live independently,” said Dan Starck, Chairman of the CQRC. “No business can take on a 39 percent average cut to reimbursement and expect to survive long. Unfortunately, it’s the patients who require lifesaving oxygen who are hurt most by this policy.”

The GAO conclusions support the home oxygen industry’s request to extend the blended rate in both the non-rural and rural non-CBAs. CQRC urges CMS to finalize the proposed rule that reforms the competitive bidding program and to extend the blended rate for the rural, non-CBAs. CQRC also urges CMS to finalize a policy to extend it to the non-rural, non-CBAs which it sought comment on earlier this year.

Among the report’s key findings was that CMS decision to adjust reimbursement rates led to an 8 percent reduction of suppliers serving non-bid areas between 2015 and 2016. GAO found that the reductions of suppliers was the same across the rural and non-rural CBAs, with an unnaturally drastic 10 percent drop nationwide in oxygen suppliers and 5 percent decline in continuous positive airway pressure (CPAP) equipment providers. Since the research only covers the first year following CMS’ new payment policy went into effect, CQRC agrees with GAO’s assessment that the impact of the depressed rates below cost will not be reflected in the monitoring elements immediately.

“At a time when the incidence of COPD is rising, it does not make sense that utilization of these products would be decreasing unless there was a serious external shock,” continued Starck. “Since the report does not address the impacts of the policy on new patients with COPD, nor does it cover 2017 and beyond, it is essential for GAO to continue monitoring utilization rates. As oxygen providers continue to get pushed out of markets across the country, it is essential for CMS to finalize new rules that extend blended rates in both non-rural and rural non-CBAs so that providers can do what they do best: serve the Medicare patients in their communities.”

About the Council for Quality Respiratory Care
The CQRC is a coalition of the nation's seven leading home oxygen therapy provider and manufacturing companies. To learn more, visit and follow CQRC on Twitter at @TheCQRC.
The Council for Quality Respiratory Care
Sarah Rhoades